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The heterogeneity that characterizes the modern Indian consumer has created a maze that marketeers would like to unravel in order to target their products and services precisely. In this fortnightly series, Indicus Analytics presents the various facets of urban consumers, across geographies and socio-economic groups
Despite visible growth in rural markets, it is in the teeming urban centres that most of the action takes place. Indian cities vary not only in size but also in terms of economic activity. There are the bustling metropolises, towns dominated by manufacturing (Coimbatore-Tiruppur), large agrimarket towns (Guntur), towns that are basically transport hubs (Itarsi) and mining towns (Dhanbad). And then there are numerous small towns, most of which have no special characteristic—overgrown villages whose markets attract people from the countryside now.
Urban centres can be classified into seven distinct sets:
l Metros with large populations—Mumbai, Delhi, Bangalore, Chennai and Kolkata—are, of course, a marketeer’s delight. They all have a good mix of the affluent, the middle class and the poor. Moreover, it is not just Mumbai and Bangalore that have the cosmopolitan mix of people; even Chennai is shaking off its staid conservative image.
l Mini-metros are again five in number. These cities are growing so fast they are straining at their edges to make it to the big league soon—Hyderabad, Ahmedabad, Pune, Coimbatore and Chandigarh. On an average, mini-metros have a higher share of rich households than metros, a reflection of the smaller size and the higher density of professionals and skilled migrants.
l Tier I towns, with populations of more than 1 million, 33 in number, include most state capitals and cities such as Allahabad, Jodhpur, Visakhapatnam, etc.
l Tier II towns have populations between 600,000 and one million. There are 28 in all, including upcoming cities such as Raipur, Ranchi, Bhubaneswar, Thiruvananthapuram, etc.
l Tier III towns, with populations between 200,000 and 600,000, are 152 in total and include Vellore, Sonepat, Siliguri, Shimoga, Agartala, Aizawl, etc.
l Tier IV towns are the smallest, with populations between 100,000 and 200,000. This category has 201, including Shimla, Ambala, Dibrugarh, Wardha, etc.
l Add to these the peri-urban centres, 4,600 in number, with populations less than 100,000, that surround bigger cities or lie on highways across the country, and we get a fairly good picture of the diversity in India’s urban markets.
For those looking to tap the most affluent, metros are of course the richest and are the largest consumer markets—these five cities have a per capita income of Rs.92,000 per year, compared with the lowest rung of peri-urban centres, whose per capita income works out to Rs.53,000. Interestingly, while Mumbai has the largest share of richest households earning more than Rs.10 lakh a year, it is Delhi with its middle-class, public sector image that has the highest number of such households. Among the mini-metros, Pune, Ahmedabad, Hyderabad, Chandigarh and Coimbatore rank in that order for the highest number of affluent households.
What is most notable about India’s urban centres is that they are spread out all over the country and not just clustered in some zones. Gujarat is the leading state when it comes to rich households in tier I cities, with Surat and Vadodara the hotspots here, while Kerala has the highest concentration of rich households among tier II cities. Thiruvananthapuram and Kochi rank among the top five here.
If we look at smaller cities, Noida, Gurgaon, Mangalore and Kolhapur have the highest number of affluent households among tier III cities, while in the smallest towns, it is West Bengal and Haryana that stand out for rich households among tier IV towns—Bidhan Nagar, Panchkula, Haldia and Thanesar.